Brisbane property market forecast 2020

Eagle eyes have zoned in on the Sydney and Melbourne real estate markets this year and most analysts are relatively positive about what's to come. Now, attention is turning to Brisbane with many wondering what the outlook will be for Queensland's sunny capital. Are we going to see a downturn or is there a much-needed upturn on the horizon? 

With a noticeable change in the air across the nation, the Sydney and Melbourne markets have seemingly begun to stabilise and the rate of decline for property values is easing across the country. However, Brisbane is still facing slow falls with property values down -0.6% in June. 

Those declines are mainly confined to the detached housing sector. Apartment values, on the other hand, have started to rise and were up 0.1% for the same month, as the unit oversupply finally absorbs into the market. 

"Despite declining values in the housing sector, analysts are predicting a strong comeback from Brisbane over the next three years"

Despite declining values in the housing sector, analysts are predicting a strong comeback from Brisbane over the next three years. This should be stimulated by the recent federal election outcome in May and the Reserve Bank's interest rate cut. Both events have upped consumer sentiment and have seen improvements to the Sydney and Melbourne markets already. 

Let's explore what some of the nation's top economists have to say about the Brisbane property market forecast for 2020 and beyond.

Brisbane property market forecast 2019: influencing factors

Although prices are still falling slowly and auction clearance rates remain weak, there are positive signs of a turnaround for Brisbane. Not only are attendance rates at open inspections up 15% since before the election, relative housing affordability, the bounceback of the apartment market and strong interstate migration buoying population growth are also indications of a close market recovery.

Many other influences are at play that will naturally change the market over the remainder of the year, specifically:

Since the Sco-Mo federal election win in May, APRA has relaxed credit lending restrictions resulting in banks now being able to set their own serviceability buffers, helping more borrowers access a mortgage - and potentially a larger one. With the removal of the 7% buffer, the only restriction now is that banks must ensure borrowers can continue to service their loans if interest rates climb 2.5% higher than currently.

The Reserve Bank has cut interest rates in June from 1.5% to just 1%. To make things more interesting, the RBA has recently hinted that there could be further cuts just around the corner.  

With a positive update to credit reporting, with the "Comprehensive Credit Reporting" system, borrowers will likely see an improvement on their credit score. Previously, only negative data was listed, such as bankruptcies or defaulting on loans. Under the new system, effective since July 1st, lenders will have a clearer picture of the borrower's finances with much more information available to them, such as the type of credit applied for, the amount, and the monthly repayments for the previous two years. 

The First Home Loan Deposit Scheme will be implemented from January 1 2020 and could create stimulus in the market. Under this scheme, eligible first home buyers will only need a 5% deposit saved to be able to lend up to 95% of the purchase price of the property without needing to pay LMI.

"Under the First Home Loan Deposit Scheme, eligible first home buyers will only need a 5% deposit saved to be able to lend up to 95% of the purchase price of the property."

Brisbane property market forecast 2020: analyst predictions

Let's examine some of the Brisbane property market predictions that the country's leading analysts are forecasting for 2020 and beyond.

BIS Oxford Economics

Property analysts

Property analysts at BIS Oxford Economics are very positive about a recovering and flourishing Brisbane property market, predicting the greatest national gains in house prices - a 20% rise by 2022 and 14% for apartments. They expect to see the median house price increase from $552,000 to 665,000. This is a significant leap and the highest predicted for all capital cities.

The report forecasts that price growth will be moderate over the next 12 months, before a significant price jump from 2021 to 2022.

"With credit conditions easing and interest rates falling, improving affordability will be a catalyst for raising price growth as stronger economic growth returns and the market moves into a rising deficiency."

• 2019 to 2022: 20% increase in house values and 14% increase in unit values

Domain

Economist Trent Wiltshire

Domain Economist Trent Wiltshire expects Brisbane house and unit prices to bottom out over the next six months, with house prices to rise just 1% and unit prices to remain unchanged.

He predicts moderate growth for 2020 with house prices to increase by 3-5% and units by 0-2%. His outlook is influenced by multiple economic factors, including the elevated unemployment rate, and that despite the end of the construction boom there are still a large number of apartments entering the market.

• 2019: 1% growth in house values and 0% growth in unit values
• 2020: 3-5% growth in house values and 0-2% growth in unit values

CoreLogic-Moody's Analytics

Alternatively, analysts at Moody's Analytics believe Brisbane's apartment market is in for a comeback in 2019 - thanks to the absorption of unit oversupply - and is set to outperform the rest of the nation. Their predictions forecast apartment values to grow by nearly 1% this year before reaching 5.8% in 2020 and climbing a further 5.3% in 2021.

According to the CoreLogic-Moody's report, the housing market in Brisbane will experience a modest correction of 0.6% for house values in 2019. They believe a recovery will take place in 2020 with 1.9% growth predicted, continuing to improve in 2021 with a further 2.3% price growth.

• 2019: 0.6% correction in house prices and 1% growth in unit prices
• 2020: 1.9% growth in house prices and 5.8% growth in unit prices
• 2021: 2.3% growth in house prices and 5.3% growth in unit prices

"Moody's Analytics believe Brisbane's apartment market is in for a comeback in 2019... and is set to outperform the rest of the nation."

QBE

Housing Outlook

The QBE forecast is a mixed bag for house and unit prices over the next three years. They expect house prices in Brisbane to experience a cumulative growth of around 11% to reach $615,000 by June 2021. However, the forecast for apartments is not as rosy as Moody Analytics forecasts. QBE expects unit prices to decline by 5% over 2020-2021, with the average unit price to sit at $405,000 by June 2021.

• 2019: 1.4% growth in house prices and -2.8% decline in unit prices
• 2020: 3.6% growth in house prices and -2.4% fall in unit prices
• 2021: 6% growth in house prices and 0% growth in unit prices

Consumer sentiment in Brisbane

OpenAgent's Consumer Sentiment Report records that Queensland sentiment is presently the second highest in the nation. Post election it has risen from a stable +1.2 to +3.9 on the June index. 

Just like in Sydney, where consumer sentiment has turned around and the majority believe prices will be on the rise by the end of the year, the same appears to be happening in Brisbane. Property experts, homeowners and investors are optimistic about price growth, and most agree the market should bottom out by the end of 2019.